A year of transition

February 01, 2009
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by Arvin Donley

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For Lantmännen Group, a massive Swedish-based compan pany that has business operations in 19 European countries and an annual turnover of about $4.3 billion, 2008 was a year of transition for the portion of its business that deals with grain processing.

In May 2008, Lantmännen Cerealia was offically formed through a merger of Lantmännen Mills and Lantmännen Axa, business divisions which had a combined turnover of $461.8 million in 2007, accounting for 12.5% of the Group’s total turnover. Lantmännen Cerealia develops, produces and markets primarily grain-based products such as flour, flour mixes, grains, muesli and pasta, as well as ready-to-eat meals.

Thus far, the results of the merger have been promising. According to its most recent earnings report, Lantmännen Cerealia is performing at a high level with "improved earnings for the majority of the business area’s activities thanks to higher sales in the retail segment and a changed product mix in the industry and bakery segment."

Sweden, Norway and Denmark make up its domestic markets, but it also has significant sales in Latvia, Estonia, Lithuania, Finland, Russia and Ukraine. It has a presence in Germany and Poland as well through its part-ownership of the German VK Mühlen Company. Its primary customers are big industrial baking companies, small private bakeries, catering, and household consumers.

Lantmännen, which describes itself as a food, energy and agriculture group, said the merger was part of its new business strategy in which focus on its core business is paramount. The Group said Lantmännen Cerealia would help develop the Group’s product portfolio in order to optimize owner utility, expand the business internationally and ensure long-term profitability and growth potential.

"We will be investing heavily in increasing our collective capacity for innovation at Lantmännen Cerealia," said Magnus Johansson, business area manager of Lantmännen Cerealia. "We will become more international and we will generate a world-class supply chain, which means that we will be concentrating on improving our cost-efficiency in production, purchasing and logistics."

Lantmännen Cerealia has about twothirds of the flour milling market share in Denmark, while its next closest competitor, Valsmøllen, has about one-third.

LANTMÄNNEN’S NEWEST MILL

May 2008 also marked the opening of the Group’s newest flour mill in Vejle, Denmark. Jim Trudslev of Lantmännen Cerealia said the new mill was the culmination of a strategic plan that was first discussed in 2003 to shut down the Group’s three other mills in Denmark and move all flour production to Vejle, where a brand new mill would be built.

"It was a question of optimization in costs, salaries/wages and maintenance, and the optimization of future investments," Trudslev said. "The decision was to centralize all activities in Vejle and close down the milling activities in Odense, Lunderskov and Ringsted, which has now been fulfilled."

The decision, which was finalized in 2005, was to go with a "green field" project so that the existing mill in Vejle,

as well as the other three mills, could operate while the new mill was being constructed.

"The only part that is ‘old’ is an existing grain silo, which we renovated and built together with the new facility," Trudslev said. "The rest is totally new — the buildings, equipment, installations, control systems, and so on."

The existing grain silo had 20,000 tonnes of storage capacity and 9,600 tonnes were added during the renovation, he said. Trudslev said about 60% of the grain used for milling is brought to the facility by truck, with the remaining 40% coming in via ship. In a normal harvest year, most of the grain is sourced from Denmark and Sweden.

Trudslev said the $76 million project, which took more than two years to complete, began in October 2005 with the demolition of several warehouse buildings and taking old equipment out of the grain silo. The focus then shifted to constructing a state-of-the-art mill that

would be highly automated and capable of producing approximately 40 different flours from wheat and rye.

"It was a complicated project with very high demands on hygiene and food safety," he said.

The new 12-story mill, which is located next the Vejle Fjord near the center of the city, includes two soft wheat milling lines with 24-hour grinding capacities of 240 tonnes and 480 tonnes, respectively, plus a rye milling line with a 24-hour capac- ity of 180 tonnes. All three lines were installed by Buhler AG of Uzwil, Switzerland. He added that the mill also produces organic flour to meet the growing demand for organic food products in Denmark.

The wheat and rye coming into the mill passes through Buhler cleaning equipment and then is sent through the reduction system that includes both MDDM and MDDO (double-high) Newtronic roller mills from Buhler as well as Buhler’s Sirius plansifters.

The finished product is conveyed to a new flour storage and handling system, which includes a bulk loadout section with a storage capacity of 6,300 tonnes.

Buhler’s WinCoS.r2 automation system was installed to improve operating efficiency and reduce labor costs. The system is designed to determine the best path for moving the materials through the plant in terms of energy consumption and throughput capacity. The system creates an energy report for

each production job, which provides information on the energy consumed per kilogram of finished product. The power consumption of each motor in the entire plant is also logged. The data is used for the early maintenance warning system and provides a transparent picture of the energy balance.

After the production process, the WinCoS.r2 system also transfers the products to the bins and monitors them in storage.

Another automated feature in the plant is the multimedia information center, which automatically provides information by Short Message Service or e-mail if problems occur during the milling process. A remote access feature allows the Lantmännen staff or Buhler to fix the problem without being at the facility, which means it can operate on a "lights-out" basis if necessary.

Trudslev said the Vejle facility only uses 11 employees during a 24-hour period, which is divided into three, eighthour shifts, thanks to the increased level of automation.

The mill is designed to meet the highest sanitation and safety standards, according to Trudslev.

"There is only one entry point for the operators, and access cards are needed," he said. "Before entering the hygiene zone, a change of clothes and shoes is needed. There are no windows that can be opened, and we have temperature control in the building."

Heat treatment is the preferred method for pest control, and Trudslev said the building is designed to withstand temperatures of up to 70 degrees C (158 degrees F) during those treatments.

In terms of product quality control, the incoming grain is tested in the laboratory before processing, online measurements are taken of the flour during processing and the finished product is tested in the laboratory before being shipped to customers.

About 55% of the flour produced at the Vejle mill is shipped in bulk, while 45% is bagged for distribution to consumers, bakeries and other commercial users in Denmark. Bran, the primary byproduct produced at the mill, is marketed to the domestic feed industry. All flour and bran is delivered to customers by truck.

Lantmännen’s flour products are marketed under the brand name Kornkammeret, Amo og HavneMøllerne in Denmark.

Trudslev said the company has also made a decision to build another mill in Vejle that will produce 80 different "specialty" milling products such as whole grain, rolled grain and steamed kernels. The specialty mill is currently under construction and is scheduled to begin production in May 2009.

"The decision is part of the master plan for concentrating our activities in Vejle," Trusdslev said. "The special mill is now operating in Lunderskov but will be closed after May 2009."